What Are The Causes Of The Great Depression Dbq

The Great Depression was one of the biggest turning points in American history. Not only did it change the spending habits of U.S. citizens, but it changed how the government controlled the economy. New laws and acts were put into place that helped prevent something like the Great Depression from ever happening again.

During the 1920s, America’s economy was extremely prosperous. Businesses were producing mass amounts of products, and because wages were high, consumers were buying them. However, the spending habits of the American people are what would lead to the economy’s downfall. People would invest most of their money in stocks, and spend the rest on items they didn’t really need. Not many people put too much of their income into
savings, and those who did may have lost it anyways once the Great Depression started. The President during this time period was Calvin Coolidge. As shown in Document 1, Coolidge believed in a very “hands-off” policy when it came to government involvement in the economy. Coolidge’s administration sort of sat back and allowed the economy to prosper on its own. This did not help the country once the Great Depression hit.

There were several factors that led to the Great Depression.
However, the main cause of the economy’s failure was the stock market crash of 1929. As seen on the graph in Document 2, once the stock market crashed, the unemployment rate skyrocketed. Banks and businesses went out of business, and millions of people lost their jobs. Before the crash, below 2 million people were unemployed. Four years later, in 1933, over 12 million were unemployed. Banks completely failed, losing all of their money. This meant that any money people had saved in the bank had vanished. The President at the time of the stock market crash was Herbert Hoover. Hoover was oblivious to the crash of the economy and did not know how to deal with it. His administration did little to help the economy or restore the country. In Document 3, you can see that Franklin D. Roosevelt, while running for president, said that “the only efforts by the Hoover administration to cope with the distress of unemployment were to deny its existence.” Because of Hoover’s failure as President, and Roosevelt’s promises, Roosevelt was elected as the new President in 1932. He would go on to serve three terms due to his great success in leading the
country.

Once Roosevelt became President, the government’s response to the Great Depression changed.
In Document 4, Roosevelt says in his First Inaugural Address that he understands the problems of the American people and can sympathize with them. Because he personally understood what they were going through, it made them think that he would be able to help the country. His administration took more control over the economy and through a long, slow process, it gradually improved. In the first 100 days of his presidency, he shut down all banks that clearly were not going to assist the economy. He gave “fireside chats” to the American citizens, and personally explained to them how he was going to improve the economy. What truly brought the United States out of the Great Depression was Roosevelt’s New Deal. He created many important programs that aimed at providing economic relief for workers and farmers and creating jobs for the unemployed. He also initiated a slate of reforms of the financial system that helped protect depositors’ accounts and regulate the stock market. In 1935, Roosevelt created a new wave of reforms known as the “Second New Deal.” This included the Social Security Act, which for the first time provided Americans with unemployment, disability, and pensions for old age. Congress also raised taxes on large corporations and wealthy individuals. While the acts Roosevelt enforced with the New Deal vastly improved the economy, many American citizens were weary of them. In
Document 5, there is a cartoon portraying an artist’s view on the New Deal. He saw it more as a way for people to test out their new ideas on the American economy than as a way to firmly improve the economy. During the Great Depression, the government set many new laws in place regarding the stock market and the general economy to make sure this kind of disaster never occurred again. They also wanted to ensure that if it did, the American people would not lose all of their money and jobs. They wanted to make the economy safer and more stable. Thanks to Franklin Roosevelt and his administration, the government was successful.